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Salisbury Moving Ahead With Business Disclosure Changes

SALISBURY — A Business Disclosure Ordinance is being advanced by the Salisbury City Council this week with supporters calling it a clear-cut transparency law while opponents argue that there is no need or public demand for the measure.

The ordinance would require any vendors who contract with Salisbury for more than $3,000 in a single agreement or $10,000 for the fiscal year to fully reveal all partners or owners with more than a 5 percent stake in the company. It would mean that all parties in a LLC or all officers in a corporation would also have to be known before contracting with the city.

“I’d like to see it apply to our vendors as it does in other places,” said Council President Terry Cohen. “It’s only a two-page form and we’re not asking them to disclose their finances, we’re asking them to disclose their beneficial ownership.”

It’s a standard operating procedure in many areas, according to Cohen, including Frederick County in the state of Maryland.

“I don’t see us becoming a lone wolf or one of a few cities doing this,” she said.

Shields worried that the extra level of scrutiny might discourage business. There also doesn’t seem to be much pressure from the public to see the ordinance implemented, she said.

“I have not understood the reason for doing this at all. I don’t see any reason for doing this, a legitimate reason,” Shields said.

There were other downsides, added Councilwoman Laura Mitchell, who felt that liability risks increase if the council demands to know the identities of everyone they contract with.

“By knowing, we open ourselves up to additional liability, I feel,” she said.

If the council doesn’t know who the members of an LLC are, for example, there can be no charges of favoritism, Mitchell concluded.

Operating in the dark, even if it offered some protection, wasn’t a good policy, asserted Councilman Tim Spies.

“I have not heard anything and again as far as nationally, statewide, regionally, locally, where the public wants to know less about the people they deal with, less transparency,” he said. “I haven’t heard anybody asking for less transparency in government.”

Spies commented on the “fluidity” of LLCs and their ability to camouflage members.

“We could do business with a group on Thursday and Friday it may be somebody else,” he said.

Cohen also lined up the issue as a simple increase in transparency.

“I feel like when you’re dealing with public money nobody should have anything to hide,” she said.

But Mitchell claimed the ordinance wasn’t about vendors trying to hide and instead framed it as a personal “vendetta” held by members of the council.

“I’m not talking about hiding. This is your vendetta,” she told Cohen. “This isn’t about hiding anything.”

Cohen took issue at the “personal remark” but didn’t respond and asked that discussion remain on topic.

“We are not going to have another session of personal attacks. We are here to discuss a transparency law,” she said. “This type of law has been implemented in other parts of the country.”

According to Mitchell, her remarks were on topic. There is no need for the ordinance, she added, because it doesn’t “serve a transparency purpose if you’re not making [the information] public.”

“It’s a policy that doesn’t make any sense based on an actual need to know,” Mitchell said.

The public would have access to the information, noted Cohen, through outlets like a Freedom of Information Act filing. But Mitchell maintained that the setup was an excessive hassle, especially after the majority of councilmembers agreed that both owners and officers in a company should fall under the disclosure.

“It’s getting bigger and bigger,” said Mitchell.

City Attorney Mark Tilghman pointed out that if the council wanted to include all owners of a company with a 5 percent share or greater that it only made sense to include officers as well.

“With a corporation, the officers really do make the decisions … officers are more important than owners,” he said. “Once they are elected officers they are the business until the next board of directors meeting. So you do need the officers.”

That’s debatable, according to Mitchell, who felt that officers won’t necessarily have the final say since owners could have other employees not designated as officers making the final calls.

Shields and Mitchell’s reluctance weren’t enough to discourage the other councilmembers, however, and the ordinance will advance from work sessions to the legislative stage by a vote of 3-2.